Ex-lobbyist Poundstone pushes anti-tax state ballot initiative

According to firebrand former Colorado lobbyist Freda Poundstone, “People voted for [Barack] Obama because they’re desperate and want change.”

And to Poundstone, the change Colorado needs comes in the form of a ballot initiative she’s co-sponsoring that would drastically limit state revenue by slashing taxes and fees. The plan, which is making its way through the review process on its way to the 2010 ballot, stands in stark opposition to the stimulus-spending mantra coming out of Washington, D.C.

The Colorado initiative is alarming at least two state lawmakers who have examined it. Sen. Chris Romer, D-Denver, said the initiative would “end government as we know it.” And House Speaker Terrance Carroll, D-Denver, suggested it would move the state down the road to anarchy.

Despite the sweeping ambition of Poundstone’s “change” initiative and the fact that it’s written in the kind of generalized language sure to draw lawsuits, the only real hurdle it faces on its way toward the Colorado Constitution is the need to secure the roughly 76,000 citizen signatures it takes to make it onto the ballot and then win a majority of votes on Election Day.

The Poundstone initiative exemplifies a problem that has increasingly plagued the state in recent years. Constitutional lawyers agree with Solicitor General Dan Domenico, who says the state’s “very liberal policy” regarding ballot initiatives all but guarantees legal battles by drawing increasing numbers of proposals and then not vetting them properly. This past election, Colorado printed the longest ballot in the country, passing famously lax Oregon and California with a list of 14 amendments and initiatives, fueling concerns that the state is becoming, in effect, a national legal testing ground, where laws can be relatively easily placed on the books to generate precedent and momentum for movements of all stripes.

Constitutional Amendment 54, for example, a so-called clean government amendment voted into law in November that mimics anti-corruption laws passed through the legislatures in New Jersey and Connecticut, has been the subject of two lawsuits that hinge on what plaintiff attorneys call the amendment’s “sloppy language.” The shoddy architecture of Amendment 54, the attorneys contend, will have untold consequences and would have been fixed had it been drawn up in the usual fashion by lawmakers. Doug Friednash, who represents one group of plaintiffs challenging the amendment, said the sloppy language of the amendment and the fact that it passed as a ballot initiative raises questions about the motivation of the authors.

“[Amendment 54] looks more like a political missile than something designed to address a serious public policy issue,” said Friednash. “People say it was designed to hit unions. That may well be true. … Connecticut dealt with the pay-to-play issue by drafting a tight law that was upheld in federal court. [Connecticut] Gov. [John] Rowland’s conviction on corruption stands as a result. But 54 wasn’t drafted narrowly like that to serve a compelling state issue.”

The Poundstone initiative isn’t drafted narrowly either.

“Government would tax the air you breathe if it could, and if they can’t find a way to do that, then they’d go around and do it with a fee,” Poundstone said in defense of the initiative.

Her initiative proposes to slash income taxes as well as sales and rebate taxes and all variety of fees on transportation and communications, focusing particularly on vehicle and phone fees. But the state’s attorneys assigned to review the initiative critiqued its language at length, pointing to undefined words and muddy phrases that could swamp the state in exactly the kind of debate currently raging over Amendment 54 in court filings but also over Senate Bill 228 in the General Assembly. The latter is a budget reform bill that would repeal the 1992 Arveschoug-Bird provision that requires any surplus of state revenues be devoted to transportation and capital construction projects.

Even a cursory reading of the Legal Services review of the Poundstone initiative suggests the vast field of legal battles that may be on the horizon.

With regard to the “Telecommunications” section of the proposed initiative:

a. Are you proposing that the only fee on telecommunications be a 911 fee to be charged at the 2009 rate in perpetuity? If not, what other telecommunication fees, taxes, or charges are allowed to be levied under the provisions of the proposed initiative? Would this include a franchise fee?

b. Do you anticipate that the costs of providing 911 services will increase to the extent that eventually the fees at the 2009 rates will not be sufficient to cover the costs of providing the 911 services? If so, how would 911 service providers cover their costs so that these services may be provided in the future?

[…]

e. Are the charges on “telephone, pager, cable, television, radio, Internet, computer, satellite, or other telecommunication service customer accounts” all charges imposed by a state or local governmental entity? Are any of these charges imposed by the federal government or by private entities? If so, can the proposed initiative require that these charges no longer be imposed?

The questions in the vehicle section seem equally basic in the realm of lawmaking.

With regard to the “Vehicle” section of the proposed initiative:

a. Is it your intent that the reduction in specific ownership taxes apply to all vehicles, including commercial vehicles and passenger vehicles?

b. The proposed initiative requires that all specific ownership taxes decrease in “four equal yearly steps”. What do you mean by “yearly”? Is this a calendar year or a fiscal year?

c. How do you envision the reduction in “four equal yearly steps” to occur in practice? Currently, specific ownership tax is calculated based on a certain percentage of the value of the vehicle, and the percentage decreases periodically based on the age of the vehicle. Who will determine how much tax a vehicle owner owes under the provisions of the proposed initiative?

d. What is the purpose of reducing the amount of the tax to $2 or $1 on vehicles, rather than simply eliminating the tax? Would the cost of administering and collecting such a small amount exceed the amount of revenue produced?

e. What do you mean by “other vehicles”? Is your intent to refer to used vehicles? If not, to what type of other vehicles are you referring in the proposed initiative?

[…]

g. What does “and on $10,000, reached in four equal yearly steps, of sales prices per vehicle” mean? Does the phrase “All state and local taxes shall cease” apply to that phrase?

h. In connection with question g. above, is it your intent that state and local sales taxes not be paid on more than $10,000 of the value of a new vehicle when sold? Or, are sales taxes to cease on $10,000 of the sales price of a vehicle (i.e., $10,000 of the purchase price is exempt)? If not, what is your intended purpose? If this is your intent, would you consider clarifying this with additional language? For example, that sentence could be broken up into two sentences as follows…

Poundstone and Gross — whom Poundstone called a “gentleman caller” from Kersey — have already rejected the nine pages of suggestions prepared by the state’s Legal Services attorneys, in which the above critiques appear. Gross, Poundstone said, only made minor changes in the initiative. He didn’t return calls for comment.

Poundstone and Gross submitted their final version of the initiative to the state last week — a third version, effectively unchanged from the original.

The anti-tax duo will take the initiative as-is first to a Review and Comment hearing next week and then to a Title Board hearing, both mere formalities, as the secretary of state and attorney general’s offices have readily admitted.

“It’s up to the voters to judge the merits,” said a Legislative Services attorney who wished to remain anonymous. “We treat any and all proposed initiatives the same — this one and all of them. We’re not gatekeepers.”

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